Merchant, Clive Commodity Funds Beat Average Returns

Dec. 10 (Bloomberg) -- Michael Coleman and Doug King’s
Merchant Commodity Fund and Chris Levett’s Clive Fund posted
returns in the first 11 months that were more than four times
average gains by hedge funds and outperformed index investments.

The $1.4 billion Merchant fund climbed 14.4 percent through
November, according to a report obtained by Bloomberg News.
Coleman confirmed its accuracy. Clive Capital LLP’s $4 billion
fund advanced 11.3 percent, according to two people with direct
knowledge of the matter. They declined to be identified because
the numbers are private.

Hedge funds returned 2.8 percent on average from January to
November, according to Chicago-based Hedge Fund Research Inc.
The Coleman and Clive funds also beat the S&P GSCI Total Return
Index, which dropped 0.3 percent, indicating losses for
investors tracking the gauge of 24 commodities futures.

“Those who take a directional approach are doing quite
well this year,” said Fraser McKenzie, head of research at 47
Degrees North Capital Management Ltd., based in Pfaeffikon,
Switzerland. Money managers are “bullish” on raw materials and
are placing bets that growth in China and the U.S. will mean
more demand for metals and energy, he said.

The Merchant fund headed for its seventh consecutive annual
advance. It lost 4.6 percent last month, the most since April,
primarily because of agriculture, according to the report. King
was head of global petroleum trading at Cargill Inc. while
Coleman ran rubber trading.

‘Most Volatile’

November “was overall the most volatile month in
commodities for over a year,” the fund said in the report. The
Chinese government’s measures to tackle commodity-related
inflation and Ireland’s sovereign-debt crisis prompted investors
to avoid risks in commodity markets, the fund said.

Raw sugar lost 5.4 percent in November on ICE Futures in
New York after peaking at 33.39 cents per pound on Nov. 11, the
highest since 1981. Cotton futures climbed to record $1.5195 a
pound on Nov. 10 and recorded a 6.3 percent decline in the month.

The Clive Fund gained 0.56 percent in November, according
to the two people. It started in December 2007 and has advanced
every year since then, investing in all commodities, currencies
and interest rates. Levett, 40, founded the hedge fund after his
departure from New York-based Moore Capital Management LLC.

The Thomson Reuters/Jefferies CRB Index of 19 raw materials
advanced 0.3 percent last month, heading for a second
consecutive year of increase. Cotton, silver and coffee led
gains in the gauge this year. Copper and gold advanced to
records this week.

Hedge funds are largely unregulated investment vehicles
whose managers can trade any asset, aim to make money regardless
of whether markets rise or fall and participate substantially in
profits from money invested.